Names In the News

Andersen Gets Off

The U.S. Supreme Court unanimously overturned in May the 2002 conviction of the now moribund accounting firm Arthur Andersen.

Andersen was convicted for shredding documents in advance of a Securities and Exchange Commission investigation into the firm’s work for Enron. Andersen employees gave the go-ahead to many of the accounting tricks that led to Enron’s implosion. After the conviction, Andersen effectively went out of business.

Federal officials indicted Andersen for knowingly and corruptly persuading another person with intent to cause that person to “withhold” documents from, or “alter” documents for use in, an “official proceeding.”

The jury returned a guilty verdict.

The Supreme Court, however, held that the jury instructions failed to convey properly the elements of a corrupt persuasion conviction.

The Court held that even persuading a person “with intent to cause” that person to “withhold” testimony or documents from the government is not inherently malign.

The Court ruled that prosecutors should have been required to show not just that Andersen knowingly urged document destruction, but that it knew that doing so was wrong and a violation of the law.

The Court said that it was striking how little culpability the jury instructions in Andersen’s trial required. For example, the jury was told that, even if Andersen honestly and sincerely believed its conduct was lawful, the jury could convict.

The Supreme Court ruling may benefit some corporate executives who have been prosecuted on grounds similar to Andersen. But it will not give them a free hand. The 2002 Sarbanes-Oxley legislation passed after the Enron scandals makes it easier to prosecute for document destruction.

Bank Fee Spree

Bank overdraft fees sucked $10.5 billion from consumers in the United States in 2004, according to a June report by the Durham, North Carolina-based Center for Responsible Lending.

“Many people are finding themselves with overdraft loans they never asked for, do not want and cannot afford,” and “federal regulators have failed to protect these customers,” the report found.

In recent years, banks began levying hefty fees, ranging from $20 to $35 a pop, for customers who overdraft their accounts.

“The programs are designed to increase the number of overdrafts and increase institutions’ fee income,” the group reported.

Banks are extending credit by paying customers’ checks, debit card transactions or ATM withdrawals when customers have insufficient funds in their accounts. The banks pay the amount of the overdraft, often without the consent of the customer. When the customer’s next deposit is made to her account, the institution debits the amount of the overdraft, plus the fee.

As a result of the high fees and short repayment time, borrowers pay triple- and even quadruple-digit interest rates. According to the report, a $22.50 fee for an $80 overdraft loan translates into a 1,467 percent annual percentage rate for a loan paid back in a week and a 733 percent APR if the loan is repaid in two weeks.

Dirty Kilowatts

The 50 biggest power plants in the United States generate as little as 14 percent of the nation’s electric power, but account for a disproportionately large share of pollution emissions across four major categories — up to 50 percent of sulfur dioxide emissions, 42 percent of mercury, 40 percent of nitrogen oxides and 35 percent of carbon dioxide pollution.

That’s the key finding of a May report, “Dirty Kilowatts,” from the Washington, D.C.-based Environmental Integrity Project.

Currently available and affordable technologies could remove the vast majority of the pollutants in question, according to the report, reducing the amount of air pollution per megawatt hour by more than 20 times in one major emission category: sulfur dioxide.

According to the report, the 50 dirtiest U.S. power plants averaged 22.8 pounds of sulfur dioxide emissions per megawatt-hour, compared to an average of 8.3 pounds per megawatt-hour among all of the nation’s 359 largest plants, and under one pound per megawatt-hour for plants equipped with state-of-the-art scrubber technologies.

“The real tragedy for the health of Americans and our environment is that most of this problem is already preventable,” says Environmental Integrity Project Director Eric Schaeffer.

“Power plant sulfur dioxide and nitrogen oxide emissions contribute to fine particle pollution that triggers asthma attacks and causes lung and heart disease linked to more than 20,000 premature deaths a year,” Schaeffer says. “Carbon dioxide gases contribute to the gradual warming of the planet. Mercury from power plants is a deadly neurotoxin, especially dangerous to developing fetuses and already estimated to be at unhealthy levels in at least 10 percent of pregnant women.”